SA in luck that China is driving fuel-cell technology
SA is the world's leading source of platinum and China's push for hydrogen fuel cells using the metal brings money to develop the technology
If there was a stroke of luck for SA’s platinum industry it surely has to be that China is one of the forerunners in driving hydrogen fuel-cell technology and adoption.
In a global market where there is so much uncertainty around platinum, with the rise of battery electric vehicles — which use no platinum group metals — and their forecast displacement of internal combustion engines which use platinum and palladium in diesel and petrol exhaust system autocatalysts to scrub out pollutants.
The rate of displacement is anyone’s guess and forecasts vary, but the one certainty is that, certainly for passenger vehicles used in cities, the battery electric vehicle, which can be recharged at home or at work and used for relatively short commutes, is gaining traction.
There is another form of drive train for vehicles and it converts the energy pent up in hydrogen to electricity by passing it through a platinum covered set of plates, fusing it with oxygen, creating power and water.
The problem with hydrogen as an energy source is that there are not a lot of refuelling points and the energy needed to convert water or methane into hydrogen makes it a relatively expensive and inefficient system and completely unviable if using grid power from coal-fired plants.
This is where China comes in. The Chinese government is backing hydrogen as one of the solutions to addressing pollution, particularly in cities that are home to tens of millions of people.
“What happens in China influences the rest of the world,” says Andrew Hinkly, managing partner of AP Ventures, an investment fund spun out of Anglo American Platinum that is finding and investing in companies and technologies using platinum group metals.
A visit to a number of cities in China, including Shanghai, Shenzhen and Rugao, showed the focus that the national government, local government and businesses had placed on hydrogen. In some cases, subsidies awarded by both national and local governments surpassed the cost of building fuel cell delivery trucks.
And entrepreneurs in China are quick to pounce on incentives the government is providing and the early-mover advantage coming from these opportunities. The speed at which new factories are springing up, agreements on joint ventures with overseas hydrogen technology companies are signed and production started is phenomenal.
“That’s China speed. You don’t understand it if you don’t see it for yourself,” says Mark Sun, the head of marketing and business development for Anglo American Platinum in Asia and the Pacific.
“Once people realise this is a good opportunity, that there’s lots of money and good government policy, everybody tries to take the opportunity because if you act quickly you can get a piece of the pie. If you are a bit late or hesitate you are out of the game. That’s always the key in China which makes it so different.”
The government is subsidising the construction of hydrogen refuelling stations, which cost about $2m to build. The plan is to build a network of these stations in places like the Yangtze River Delta, servicing arterial routes dominated by diesel-powered trucks.
“What was clear from our visits was how the government of China uses an incentive approach (carrot) rather than a regulatory (stick) approach to get the private sector involved and to stimulate growth in areas of the economy it sees as of strategic importance, including fuel cell electric vehicles,” said Citi analyst Johann Steyn.
“We cannot help but to use this opportunity to contrast the approach taken by example the SA government, where higher regulation, penalties, and taxes are frequently used,” he said.
“It is our opinion that the SA government, in order to fulfil its aim of stimulating economic growth, could take a page from the Chinese model, which has yielded significant and consistent growth over the past two decades.”
The development of the hydrogen fuel-cell industry is tangible. Factories are springing up and in cities like Rugao, local governments have adopted the technology as a linchpin for developing industrial hubs. Xu Guo, the vice mayor of Yunfu, said 20 cities had opted to make hydrogen-related energy their core industrial focus.
China spent more than $12bn on the hydrogen sector in 2018.It plans to have 1,000 hydrogen refuelling stations by 2030, servicing a total of 2-million vehicles by then. China is one of the world’s largest producers of hydrogen, making about 20-million tonsa year or nearly a third of global output.
It is also wasting 150GW of electricity each year that cannot be used. This electricity generated in northern China could be used to create hydrogen, generating 1kg per 10kg of water. It takes 3kg of hydrogen to propel a 7.5-ton delivery truck 100km, as an example. For a passenger car, it would be 1kg per 100km.
Fuel cells provide longer distances and quicker refuelling times than batteries, making it a sensible option for a country’s transport fleet, while passenger cars in cities and towns can be charged at home overnight or at work.
The intention is for China to have a fleet of 2-million fuel-cell vehicles on the roads by 2030.
Steyn cautions this is not a panacea and major new source of platinum demand for SA’s platinum miners, but it is a step in the right direction, particularly if this technology is adopted in other countries.
“The level of development of fuel cell development in China has surprised the market, which had previously written off any incremental demand from fuel cells,” said Emma Chapman, head of investor relations at Anglo American Platinum.
“China is an important market for fuel cells; and we are seeing both government and private enterprises are working together to develop not only the vehicles, but the whole value-chain from production of fuel cell stacks and systems and associated infrastructure and refuelling stations.”
• Seccombe was hosted in China by Anglo American Platinum.